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Amid signs of some cooling off on the inflation level, the US is scheduled to announce its GDP data on Thursday, August 25, 2022.
According to the advance estimate, the American economy technically entered a recession, contracting by an annualised rate of 0.9% quarter-on-quarter during Q2 2022, following a 1.6% decline in the previous quarter. Many investors were expecting growth for the quarter.
Federal Reserve Chair, Jerome Powell, recently said he is not of the view that the US is in a recession, pointing toward the strength in the country’s labour market.
What’s the economic outlook for the US?
Employers in the US are continuing to hire at a solid pace, adding more than half a million jobs in July and 1.2 million jobs during the second quarter. Despite the labour market showing signs of strengthening, the second quarter GDP expectations still show a contraction in the US economy.
Although investors are relieved by the slower-than-expected inflation for July, this is not expected to stop the Fed from raising interest rates at its next policy meeting in September. The Fed, may move forward with a less aggressive rate increase of 50 bps, compared to a 75 bps hike.
EUR/USD prospects
The release of GDP data is expected to significantly impact the EURUSD pair. Goldman Sachs has recently lowered its projections for the euro relative to the greenback, saying, “The next 6 months seem likely to be challenging for the Euro area, which is likely to keep EUR/USD close to parity.” Goldman Sachs’ economists also expect the Eurozone economy to move into recession during the second half of the year.
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